2015 (9) TMI 1292 - AT - Income Tax

Penalty levied by the AO u/s 271(1)(c) - CIT(A) deleted the levy - revision of computation of income - Held that - In the present case, it is an admitted fact that the assessee wrongly computed the short term capital gain to be carried forward due to some wrong formula entered into computation sheet used to work out the short term/long term capital gains / loss and when the mistake came to his notice, the assessee corrected the figures and filed the revised details of short term capital loss before the AO vide letter dated 24.10.2011, much before the completion of the assessment on 22.12.2011. The AO accepted the figures of short term capital loss to be carried forward at ₹ 30,27,277/- in place of the earlier claimed loss of ₹ 62,09,653/-. However, he levied the penalty u/s 271(1)(c) of the Act. From the aforesaid narrated facts of the present case, it is crystal clear that the intention of the assessee was not mala fide because he himself corrected the figure, revised the computation and paid the due tax on the income of the succeeding years because the claim of carried forward of short term capital loss had affected the future tax liability. See Price Water House Coopers (P.) Ltd., 2012 (9) TMI 775 - SUPREME COURT Thus we hold that no penalty is leviable in the facts and circumstances of the case under Section 271(1)(c) of the Act. Hence, the appeal filed by the assessee is allowed in full. - Decided in favour of assessee.

Summary

Issues involved:
Appeal against deletion of penalty under section 271(1)(c) of the IT Act, 1961.

Detailed Analysis:

1. Background and Assessment Order:
The appellant filed a return of income declaring nil income and claiming short term capital loss. The AO allowed a different amount of short term capital loss to be carried forward. The appellant did not appeal against this assessment, leading to a penalty under section 271(1)(c) of the Act.

2. Submission and Revision of Details:
The appellant explained that a mistake occurred in the computation of capital gains due to an error in the formula used. Upon receiving a questionnaire, the mistake was discovered, and revised details were submitted to the AO. The appellant revised the return for subsequent years and paid the taxes due, demonstrating bonafide intentions.

3. CIT(A) Decision:
The CIT(A) deleted the penalty after considering the appellant's submissions. It was noted that the appellant corrected the mistake promptly, and there was no intention to provide inaccurate particulars of income. The CIT(A) found that the preconditions for levying the penalty under section 271(1)(c) were not satisfied.

4. Appellate Tribunal Decision:
The department appealed the CIT(A)'s decision, arguing that the appellant concealed income by disclosing incorrect figures. However, the Tribunal upheld the CIT(A)'s decision, emphasizing that the appellant's actions were not mala fide. Citing a similar case, the Tribunal concluded that the penalty was not justified due to the appellant's bona fide error correction and payment of taxes for subsequent years.

5. Conclusion:
The Tribunal dismissed the department's appeal, affirming the CIT(A)'s decision to delete the penalty under section 271(1)(c) of the IT Act, 1961. The judgment highlighted the importance of bonafide intentions and prompt correction of errors in tax matters, ultimately leading to the dismissal of the appeal.